What is the amount of income or loss from acceptance of the offer?
A) $97,500 income
B) $94,500 loss
C) $37,500 income
D) $37,500 loss

Question

Quizplus · Accepted Answer

The question doesn't provide any information about the cost of producing the tablets. Hence, we can only calculate the income from acceptance of the offer. 
# of tablets = 15,000 + 5,000 = 20,000 
Revenue from sale of 20,000 tablets = 20,000 x $10 = $200,000 
Cost of producing 20,000 tablets = 20,000 x $5 = $100,000 
Income from acceptance of the offer = Revenue - Cost = $200,000 - $100,000 = $100,000 
However, since the question asks for "amount of income or loss," we need to take into account the $2,500 penalty for late delivery. 
Amount of income after penalty = $100,000 - $2,500 = $97,500 
Therefore, the correct answer is A) $97,500 income.

What Is the Amount of Income or Loss from Acceptance